Understanding different types of loans

Banks and financial institutions make money by giving money to their customers in the form of loans. The money they make is the interest earned from loaning out money. Be careful, anything above a 10% interest rate is considered high. These are the different types of loans you can get from a bank.

Personal loans - You better have excellent credit score for this type of loan so the interest you have to pay will not be so high. These are called unsecured loans which means you do not have to put up your home or any other collateral to secure financing. You can borrow a fixed amount of money, repay it at a fixed payment amount over a fixed peroid of time.
Credit cards -These offer you a line of credit that you can use to make purchases. They are loans which you pay back in the future. Either pay the full amount back every month or you start paying high interest rates on the items you purchased.
Home-Equity Loans - This is a type of loan in which the borrower uses the equity (value) in their home as collateral. The loan amount depends on how much your home is worth.
Home-Equity line of Credit- This one uses the equity of your home to give you credit which means you can draw money a number of times until you reach your maximum.
Credit card cash advances - Cash advance allows you to use your credit card to get a short-term cash loan at a bank.
Small business loans - Your credit score must be above 700 to be approved for a small business loan.